Alaska LNG Tax Bill Collapses Amid Dispute Over Hilcorp's Role

A failed Alaska LNG tax incentive bill has sparked a political dispute over whether Hilcorp influenced its defeat, as lawmakers, the governor and project developers offer conflicting accounts.

(P&GJ) — A failed tax incentive package tied to the proposed Alaska LNG project has triggered a political dispute over whether Hilcorp influenced the bill's collapse, with lawmakers, project developers and Gov. Mike Dunleavy offering conflicting explanations, according to the Alaska Beacon, as republished by Alaska Public Media.

The legislation was designed to support financing for the proposed $54.5 billion Alaska LNG pipeline by providing long-term property tax relief. To secure enough legislative support, lawmakers added a provision that would have imposed an income tax on certain pass-through entities, a measure commonly referred to as the "S Corp tax."

Some legislators contend the compromise unraveled after Hilcorp objected to the tax provision. Rep. Calvin Schrage said Glenfarne, the project's lead developer, had initially indicated support for the compromise before later reversing course, which he attributed to pressure from Hilcorp. Glenfarne has denied that account, saying it opposed the legislation after reviewing the final language.

The proposal advanced through a conference committee and narrowly cleared the Alaska Senate, but failed in the House after Gov. Mike Dunleavy said he would veto the measure if it reached his desk.

Dunleavy rejected claims that Hilcorp influenced his position, calling the allegation "bulls**t" during remarks to reporters. He instead argued lawmakers jeopardized the pipeline proposal by attaching the pass-through tax provision to legislation intended to advance the project.

Glenfarne has maintained that the additional tax would increase commercial uncertainty for companies supporting the pipeline and make it more difficult to meet the project's economic objectives. Supporters of the bill, however, argued the compromise exempted the Alaska LNG project itself while addressing what they viewed as inequities in the state's tax structure.

The proposed pipeline would transport North Slope natural gas to a liquefied natural gas export terminal, though supporters have acknowledged the tax package alone would not have guaranteed the project's construction. The bill's failure nevertheless represents a setback for efforts to advance financing for the development, according to the Alaska Beacon, as reported by Alaska Public Media.